The court granted a declaration that an insurer was required to defend an additional named insured in action in which identical allegations were made against the named insured.

[2014] O.J. No. 351

2014 ONSC 435

Ontario Superior Court of Justice

C.J. Brown J.

January 21, 2014

The applicant, the City of Markham (the “City”), was named as a defendant in a personal injury action along with the defendant VTA Construction (“VTA”). The City was an additional named insured on a policy (the “Policy”) issued to VTA by the third party, Intact Insurance Company (“Intact”), and brought this application seeking a declaration that Intact had a duty to defend the City in the action, that the City was entitled to appoint independent counsel in the action due to a conflict with VTA, and an order that Intact reimburse the City for past defence costs of defending the action.

The action arose from the plaintiff’s alleged slip and fall on a sidewalk in the City arising as a result of an alleged "hazardous accumulation of snow, ice and/or black ice" on the sidewalk. The plaintiff alleged his injuries were caused by the negligence of both the city and VTA in failing to keep the sidewalk free of ice and snow. The particulars of negligence alleged against the City and VTA were identical.

Winter maintenance of the sidewalks in the City was contracted out to VTA pursuant to an agreement for sidewalk winter maintenance (the “Agreement”). Pursuant to the Agreement, VTA was required to carry out various winter maintenance activities, including snowplowing and sanding, and was required to be aware of sidewalk conditions. The City was required to monitor weather conditions and to call out VTA to perform maintenance activities and to supply salt and sand for those activities. The alleged slip and fall occurred two days after the most recent snowfall in the City following which VTA performed sidewalk maintenance activities.

Pursuant to the Agreement, VTA was required to maintain a comprehensive policy of public liability and property damage insurance in the amount of $5 million and to name the City as an additional insured thereunder. VTA was also required to indemnify and hold harmless the City against all claims for damage or injury to persons resulting from or arising out of any act or omission on the part of VTA.

The motion judge held that the plaintiff’s claims against the City and VTA were clear, identical, and fell within coverage under the Policy which afforded coverage to both VTA and the City with respect to snow removal operations. The motion judge further held that because the City and VTA had counterclaimed against one another in the action, there was a clear conflict between them and the City was entitled to retain its own independent counsel in the action. The City was also entitled to payment of its past legal costs by Intact.